What are cryptocurrency mixers?
Cryptocurrencies are spreading fast and wide, and because of its anonymity and not being regulated, it is a big concern for governments and financial securities. To make it even worse for them, there is a thing called “cryptocurrency mixer”, and it presents even bigger concerns to the law.
Crypto mixers are used to keep transactions private, by mixing potentially identifiable cryptocurrency funds with vast sums of other funds. This is used to anonymize funds and often it is used also for illegal activities, like money laundering.
Because it is not regulated, and it doesn’t require KYC (Know Your Customer) it is very attractive for illegal business. Mixers have constantly processed about a quarter of all incoming illegal Bitcoins.
There are two types of Bitcoin mixers: centralized and decentralized. The first one works on principle of company sending Bitcoin and then sending back different BTC for a fee. Decentralized mixers on the other hand use a coordinated or peer-to-peer approach. Everything is put into one pool, gets mixed and in the end, everyone receives their Bitcoin back, of course with the difference that nobody can track it.
Mixers should or must be registered with Financial Crimes Network to operate legally, otherwise they are illegal, so be careful you intend to use it.
The Mechanisms of Crypto Mixers
Source: CoinMixer
Sources:
https://fortune.com/2022/03/26/what-are-crypto-mixers/
https://cointelegraph.com/explained/what-is-a-cryptocurrency-mixer-and-how-does-it-work
https://www.coindesk.com/learn/bitcoin-mixers-how-do-they-work-and-why-are-they-used/
